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World of Warcraft: Wrath of the Lich King (PC)
at 1:29AM PST on October 15, 2009.
RE: China Tightens Regulation On Foreign Online Game Operation
I was shorting it before the Govt. were throwing more regulation at MMO operators because in China it's not clear what is counted as a "sale". With the first expansion, it was essentially rolled into the game free of charge for existing subscribers.
If the same were to happen again, then in my eyes that would mean only new subscribers should count as "purchasing" this expansion pack.
This isn't an insignificant number as the Chinese gaming market is of course still experiencing massive growth. I don't think it's enough to get it near 20m, however. The last we heard was the post launch figure of 3.2m or so. It must be way, way above that now but at least 40% of WoW subscribers are in China. Not only are there question marks about whether those 40% would even count as sales but at least a small amount of uncertainty regarding whether it'll see the light of day at all.
If I had told Zukaus last year that WoW would be offline for a significant period of time he'd have told me I was talking rubbish.
In the real world, an increase in uncertainty, even if it was small would affect the price; i.e. NetEase's stock price dropping 5% the other day. Whatever you think about this stock, you have to concede there is more uncertainty around it than there was 3,6,12 months ago. Yet price isn't effected at all.
The foreign MMO operators are effectively a cartel. It's a very difficult market for western operators to be involved with.
If I was Blizzard I would question whether throwing money at this problem offers return on investment in terms of a) retaining existing subs and b) attracting new ones is worth it compared to making sure they don't have the same problem with StarCraft 2 & Battle.net
Still, all of my short margin is on this stock, I can do no more.
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